Solved: My ssa1099 has workers compensation offset that shows my income as $19,000 more than it was which is making me owe big because it put me above poverty for obamacare.
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amays123
New Member

My ssa1099 has workers compensation offset that shows my income as $19,000 more than it was which is making me owe big because it put me above poverty for obamacare.

the offset was for 2015 and 2016 and added up to 32000.  I have called IRS office and they told me to call SS and ask for a corrected copy but I have called SS office 3 times and they tell me it is the way it is and I have to claim it.  Because of this amount, I don't qualify for the Obamacare that I have had all year so I am owing 7000 back.  Yet, I didn't receive this amount in 2017.  I only received 12,000.

1 Best answer

Accepted Solutions
DianeW
Expert Alumni

My ssa1099 has workers compensation offset that shows my income as $19,000 more than it was which is making me owe big because it put me above poverty for obamacare.

You have two tax situations taking place.  One is the social security lump sum benefits and the other is the repayment of previously taxed income.  

Social Security Lump Sum:  There is a "lump-sum" method of reporting in this situation which is all done on the tax return for the year of receipt of the benefits.  Enter the appropriate amounts for each year when you start that section of your return.

The IRS has a special lump-sum distribution calculation that would allow you to be taxed as though the funds were actually received in the year to which they are attributable or as though it were all for 2017.  The lowest tax result will be used.  

Great news: TurboTax can walk you through that process and calculate the proper tax based on your entries. 

  1. If the tax is lower if it had been included on the previous year returns (ex. 2013, 2014 & 2015) there will be an amount added to the tax this year.
  2. If the tax is lower by including all of it on the 2016 return then that is where it will be taxed.

Check out the screenshots I have attached to help you.  You will need your previous year returns for some of the information.

You can go directly to the area to review your entry by following these steps.

1. Sign into your account and select your current return.

2. Select Search (upper right)

3. Search for ssa1099 and Jump to ssa1099

5. Follow the interview to enter or review your entry for these benefits.

Repayment of Previously Taxed Income: Yes, you can include a repayment on your tax return.

Instructions here are specifically for your repayment with the assumption it's greater than $3000 (if under $3000 TurboTax will walk you through the screens more easily because the option is itemized deduction only).

  • Repayment over $3,000:  If the amount you repaid was more than $3,000, you can deduct the repayment on the same form you originally reported the income on (Form 1040). However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. If you qualify for this choice, figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.

When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Each instance of repayment is not considered separately. 

  • Method 1.   Figure your tax for 2017 claiming a deduction for the repaid amount. If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. 
  • Method 2.   Figure your tax for 2017 claiming a credit for the repaid amount. Follow these steps.
  1. Figure your tax for 2017 without deducting the repaid amount.
  2. Refigure your tax from the earlier year (the year you originally reported the income) without including in income the amount you repaid in 2017.
  3. Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.
  4. Subtract the answer in (3) from the tax for 2016 figured without the deduction (step 1).
  • If method 1 results in less tax, deduct the amount repaid.
  • If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71.

If you choose a deduction, please enter it here (Method 1):

  • Federal taxes - Deductions & credits - Other deductions and credits - Other deductible expense
  • Please answer YES to "Did you have any other deductions that are not subject to the 2% limitation?"
  • Please enter the amount you repaid under, "Claim of Right Repayment (Only if over $3,000).
  • Click the images attached to enlarge and view for assistance.

If you choose a credit (This can only be done in the Forms mode of the Desktop version of TurboTax), please enter it here (Method 2-only if greater than $3000):   

  • FORMS - F1040 - Below line 77 is the Other Payments and Credits Smart worksheet
  • Please enter the credit in line D. (click the image attached)
  • This credit should show up on F1040, line 72.

View solution in original post

1 Reply
DianeW
Expert Alumni

My ssa1099 has workers compensation offset that shows my income as $19,000 more than it was which is making me owe big because it put me above poverty for obamacare.

You have two tax situations taking place.  One is the social security lump sum benefits and the other is the repayment of previously taxed income.  

Social Security Lump Sum:  There is a "lump-sum" method of reporting in this situation which is all done on the tax return for the year of receipt of the benefits.  Enter the appropriate amounts for each year when you start that section of your return.

The IRS has a special lump-sum distribution calculation that would allow you to be taxed as though the funds were actually received in the year to which they are attributable or as though it were all for 2017.  The lowest tax result will be used.  

Great news: TurboTax can walk you through that process and calculate the proper tax based on your entries. 

  1. If the tax is lower if it had been included on the previous year returns (ex. 2013, 2014 & 2015) there will be an amount added to the tax this year.
  2. If the tax is lower by including all of it on the 2016 return then that is where it will be taxed.

Check out the screenshots I have attached to help you.  You will need your previous year returns for some of the information.

You can go directly to the area to review your entry by following these steps.

1. Sign into your account and select your current return.

2. Select Search (upper right)

3. Search for ssa1099 and Jump to ssa1099

5. Follow the interview to enter or review your entry for these benefits.

Repayment of Previously Taxed Income: Yes, you can include a repayment on your tax return.

Instructions here are specifically for your repayment with the assumption it's greater than $3000 (if under $3000 TurboTax will walk you through the screens more easily because the option is itemized deduction only).

  • Repayment over $3,000:  If the amount you repaid was more than $3,000, you can deduct the repayment on the same form you originally reported the income on (Form 1040). However, you can choose instead to take a tax credit for the year of repayment if you included the income under a claim of right. This means that at the time you included the income, it appeared that you had an unrestricted right to it. If you qualify for this choice, figure your tax under both methods and compare the results. Use the method (deduction or credit) that results in less tax.

When determining whether the amount you repaid was more or less than $3,000, consider the total amount being repaid on the return. Each instance of repayment is not considered separately. 

  • Method 1.   Figure your tax for 2017 claiming a deduction for the repaid amount. If you must deduct it as a miscellaneous itemized deduction, enter it on Schedule A (Form 1040), line 28. 
  • Method 2.   Figure your tax for 2017 claiming a credit for the repaid amount. Follow these steps.
  1. Figure your tax for 2017 without deducting the repaid amount.
  2. Refigure your tax from the earlier year (the year you originally reported the income) without including in income the amount you repaid in 2017.
  3. Subtract the tax in (2) from the tax shown on your return for the earlier year. This is the credit.
  4. Subtract the answer in (3) from the tax for 2016 figured without the deduction (step 1).
  • If method 1 results in less tax, deduct the amount repaid.
  • If method 2 results in less tax, claim the credit figured in (3) above on Form 1040, line 71.

If you choose a deduction, please enter it here (Method 1):

  • Federal taxes - Deductions & credits - Other deductions and credits - Other deductible expense
  • Please answer YES to "Did you have any other deductions that are not subject to the 2% limitation?"
  • Please enter the amount you repaid under, "Claim of Right Repayment (Only if over $3,000).
  • Click the images attached to enlarge and view for assistance.

If you choose a credit (This can only be done in the Forms mode of the Desktop version of TurboTax), please enter it here (Method 2-only if greater than $3000):   

  • FORMS - F1040 - Below line 77 is the Other Payments and Credits Smart worksheet
  • Please enter the credit in line D. (click the image attached)
  • This credit should show up on F1040, line 72.

View solution in original post

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